Shenzhou International, a major Chinese sports apparel manufacturer that works for Nike, Adidas and other brands, announced that all its factories in the Beilun district of Ningbo City have resumed production after temporary Covid lockdowns were lifted by local authorities. However, the factory closures in the region and others have led the company to lose about 2 percent of its normal total annual production.
Shenzhou hopes to make up for it by encouraging workers to stay on the job during the Chinese New Year, scheduled for the week starting on Jan. 31, while redistributing orders to other factories. The timing of the annual holidays is particularly strenuous for Chinese manufacturers, as they will occur 12 days earlier than in 2021, coinciding with a seasonal rush to deliver products to the clients on time.
With government authorities imposing “zero-tolerance” measures for any local Covid outbreaks, the flow of goods has been further hampered by the suspension of trucking services near the busy Ningbo port. According to Bloomberg, shipping companies have been diverting deliveries to the already congested harbor of Shanghai and further south to Xiamen. However, truck traffic is being slowed down as truck drivers have had to wait in line to be tested in many instances.
On the eve of the Chinese New Year, the resulting supply chain disruption is being augmented by the ongoing delays in ocean freight traffic to Europe and the U.S. Based on a survey conducted by McKinsey & Co., the supply chain disruption in the sportswear sector is likely to last throughout 2022, in contrast with the more optimistic statements by companies such as On Running.
